certain reference assets. With regard to
such derivatives, the Fund does not have a claim on the reference assets and is subject to
enhanced counterparty risk. Derivatives may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging, the change in value of a derivative may not correlate as expected with the
security or other risk being hedged. In addition, given their complexity, derivatives expose the
Fund to risks of mispricing or improper valuation. Derivatives also can expose the Fund to derivative liquidity risk, which includes risks involving the liquidity demands that derivatives can create to make
payments of margin, collateral, or settlement payments to counterparties, legal risk, which
includes the risk of loss resulting from insufficient or unenforceable contractual documentation, insufficient capacity or authority of the Fund’s counterparty and operational risk, which includes documentation or
settlement issues, system failures, inadequate controls and human error.
High Portfolio Turnover Risk. The Fund may engage in
active and frequent trading leading to increased portfolio turnover, higher transaction costs,
and the possibility that the recognition of capital gains will be accelerated, including short-term capital gains that will generally be taxable to shareholders as ordinary income.
Industry and Sector Focus Risk. At times, the Fund may increase the relative emphasis of its investments in a particular industry or sector. The prices of securities of issuers in a particular industry or sector may be more susceptible to
fluctuations due to changes in economic or business conditions, government regulations,
availability of basic resources or supplies, contagion risk within a particular industry or sector or to other industries or sectors, or other events that affect that industry or sector more than securities of issuers in other
industries and sectors. To the extent that the Fund increases the relative emphasis of its
investments in a particular industry or sector, the value of the Fund’s shares may fluctuate in response to events affecting that industry or sector.
Financials Sector Risk. Financial services companies are subject to extensive governmental regulation which may limit both the
amounts and types of loans and other financial commitments they can make, the interest rates and
fees they can charge, the scope of their activities, the prices they can charge and the amount of
capital they must maintain. Profitability is largely dependent on the availability and cost of capital funds and can fluctuate significantly when interest rates change or due to increased competition. In addition, deterioration
of the credit markets generally may cause an adverse impact in a broad range of markets,
including U.S. and international credit and interbank money markets generally, thereby affecting a wide range of financial institutions and markets. Certain events in the financials sector may cause an unusually
high degree of volatility in the financial markets, both domestic and foreign, and cause certain
financial services companies to incur large losses. Securities of financial services companies may experience a dramatic decline in value when such companies experience substantial declines in the valuations of their
assets, take action to raise capital (such as the issuance of debt or equity securities), or
cease operations. Credit losses resulting from financial difficulties of borrowers and financial losses associated with investment activities can negatively impact the sector. Insurance companies may be subject to severe price
competition. Adverse economic, business or political developments could adversely
affect financial institutions engaged in
mortgage finance or other lending or investing activities directly or indirectly connected to the
value of real estate.
Healthcare Sector Risk. Companies in the healthcare sector are subject to extensive government regulation and their
profitability can be significantly affected by restrictions on government reimbursement for
medical expenses, rising costs of medical products and services, pricing pressure (including price
discounting), limited product lines and an increased emphasis on the delivery of healthcare
through outpatient services. Companies in the healthcare sector are heavily dependent on
obtaining and defending patents, which may be time consuming and costly, and the expiration of
patents may also adversely affect the profitability of these companies. Healthcare companies are
also subject to extensive litigation based on product liability and similar claims. In addition, their products can become obsolete due to industry innovation, changes in technologies or other market developments. Many new
products in the healthcare sector require significant research and development and may be subject
to regulatory approvals, all of which may be time consuming and costly with no guarantee that any
product will come to market.
Transactions Risk. The Fund could experience a loss and its liquidity may be negatively impacted when selling securities to meet redemption requests. The risk of loss
increases if the redemption requests are unusually large or frequent or occur in times of overall
market turmoil or declining prices. Similarly, large purchases of Fund shares may adversely affect the Fund’s performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger
cash position than it ordinarily would.
Investments in the Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank and are not insured or guaranteed by the
FDIC, the Federal Reserve Board or any other government agency.
You could lose money investing in the
Fund.
The Fund’s Past
Performance
This section provides some indication of the risks of
investing in the Fund. The bar chart shows how the performance of the Fund’s Class R5 Shares has varied from year to year for the past ten calendar years. The table shows the
average annual total returns over the past one year, five years and ten years. The table compares the Fund’s performance to the performance of the Russell 1000® Index and Russell 1000® Value Index. The Russell 1000® Index serves as the Fund’s regulatory index and provides a broad measure of market performance. The
Russell 1000® Value Index is the Fund’s additional index and is more representative of the Fund’s investment
universe than the regulatory index. The performance for the Class R3 Shares are based on the performance of Class A Shares (which are not offered in this prospectus) prior to the inception
of Class R3 Shares. The performance for the Class R4 Shares are based on the performance of Class
I Shares (which are not offered in this prospectus) prior to the inception of Class R4 Shares. The actual returns of Class R3 Shares would have been different than those shown because Class R3 Shares have different
expenses than Class A Shares. The actual returns of Class R4 Shares would have been similar to
those shown because Class R4 Shares have